Aabar takes a $2.3bn stake in Unicredit

Government-backed investment vehicle is now lender's second-largest shareholder

Aabar Investments, the Abu Dhabi Government-owned investment company that owns part of the German luxury car maker Daimler, has acquired a US$2.3 billion (Dh8.44bn) stake in Italy's biggest bank. The 4.99 per cent stake in UniCredit Group makes Aabar the bank's second-biggest shareholder after Mediobanca, an Italian investment bank. It comes as Aabar, which is 70 per cent owned by the International Petroleum Investment Company (IPIC), considers a plan to delist from the Abu Dhabi Stock Exchange and go private. The company's board of directors was to vote on the issue yesterday.
A UniCredit spokeswoman declined to comment on Aabar's investment. Mohammed Badawy al Husseiny, Aabar's chief executive, yesterday confirmed the company had made the investment by buying UniCredit shares on the open market. Aabar has made numerous investments in financial companies since its dramatic transformation from a small Gulf oil services company into one of Abu Dhabi's most visible investment vehicles. It bought the troubled US insurer AIG's Swiss private banking unit last April for $253 million and invested $328m in the public offering of the Spanish Banco Santander's Brazilian unit in October.
The company has also invested with UniCredit in the past. At the end of 2008, Aabar said it bought a 3.3 per cent stake in Atlantia, an Italian holding company, from a UniCredit subsidiary for ?250m (Dh1.12bn). Last March, Aabar said it bought ?49.8m of UniCredit securities convertible into company shares. Akram Annous, a deputy fund manager at Al Mal Capital in Dubai, said yesterday's move meshed well with Aabar's previous investments, many of which have been in young or distressed industries. Aabar's acquisition of 9.1 per cent of Daimler in March last year came at a time when the European car industry was considered far from ripe for investment.
"It's roughly the same thing they did in 2009, when they went in on a very unloved trade in Europe," Mr Annous said, noting that UniCredit stock was currently trading at about half its book value. "I'm going to guess their advisers on this were similar to their advisers then. European banks are very stressed." A London-based analyst at a large global investment bank, who wished to remain anonymous, said the transaction was also positive for UniCredit because it appeared to be merely a "financial investment" with no strategic dimensions. The turn in UniCredit trading volumes over the past two months probably reflected Aabar's buying activities, he added. "Nobody was expecting this kind of news," he said.
The UniCredit investment adds to a rapidly expanding portfolio for Aabar, ranging from its Daimler stake to a 4 per cent stake in Tesla Motors, a maker of electric cars, and 32 per cent of Virgin Galactic, Sir Richard Branson's commercial space flight venture. Aabar's headline-grabbing investments began in late 2008, shortly after IPIC acquired its majority stake in the company through a bond that converted into shares. IPIC, which is wholly owned by the Abu Dhabi Government, has since acted as a main source of financing for Aabar's large acquisitions.
Prior to IPIC's involvement, Aabar had been a small oil and gas holding company with interests in the Gulf and South East Asia. Then known as Aabar Energy, the company owned Dalma Energy, a Gulf oil drilling company, and Pearl Energy, a Singapore-based oil and gas exploration and production firm. Dalma was sold to a Dubai-based company called GulfCap, and Pearl was sold to Mubadala Development, a strategic investment company owned by the Abu Dhabi Government.
Aabar stock closed 3.4 per cent lower yesterday. [e-mail]